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FOLTZ v. U.S. NEWS & WORLD REPORT

January 15, 1986

CHARLES S. FOLTZ, et al., Plaintiffs,
v.
U.S. NEWS & WORLD REPORT, INC., et al., Defendants



The opinion of the court was delivered by: PARKER

 Barrington D. Parker, District Judge:

 This class action suit is brought against U.S. News & World Report magazine ("U.S. News" or "Company") by a group of its former employees who terminated their employment during the period from 1974 through 1981. *fn1" The litigation was triggered by the sale, in October 1984, of U.S. News to real estate magnate and developer Mortimer Zuckerman for approximately $176 million. Plaintiffs complain that the stock of the Company, which constituted the corpus of the employee profit-sharing plan, was wrongfully and grossly undervalued for a number of years prior to the sale and that employees who retired during the designated class period are owed unpaid benefits and entitled to damages under various legal theories.

 The parties have completed substantial pretrial discovery and have filed cross motions for summary judgment. The issues presented are set forth, infra slip op. at pp. 5-6. This Memorandum Opinion provides the Court's ruling on those motions.

 BACKGROUND

 In 1962, U.S. News was reorganized to provide, consonant with the wishes of David Lawrence, the magazine's founder and owner, that employees of the Company would share in its ownership and profits. Accordingly, Articles of Incorporation authorized the issuance of Class A and common stock, each having full and equal voting rights. The employees could not sell or transfer their interests during their employment and upon termination were required to offer them to the Company at values established through mutual agreement or by outside appraisers.

 The Profit-Sharing Plan of U.S. News ("Plan"), a non-contributory plan, was in existence when the Articles were adopted. By 1967, the Plan had acquired 50,000 shares of Class A stock, which it held throughout the class period. In addition, U.S. News was obligated to make contributions to the Plan. Over the years, the Plan acquired a modest portfolio of investment securities, which was of limited value as compared with the Class A stock. The Plan was managed by a Profit-Sharing Committee ("Plan Committee"), appointed by the Company's Board of Directors, while its accounts were maintained by a trustee. *fn2" Each plan participant was allotted an account balance, based upon his salary and term of service. Upon retirement, the participant received payment, either lump sum or periodic, as determined by the appraised value of the Class A stock held by the Plan.

 Beginning in 1963, a stock bonus plan was adopted which allotted to certain employees common stock known as bonus or anniversary stock. The employee could not sell or encumber the stock, absent Company approval. Upon retirement or termination, each employee was, at the option of U.S. News, required to sell back his shares of stock to the Company. Payments of bonus stock were made every five years, beginning with the fifth year after an employee joined the magazine. The number of shares allotted an employee was based upon his salary and length of service.

 Together with most of the common stock, the 50,000 shares of Class A stock held by the Plan were placed in a voting trust. This arrangement gave the voting trustees effective control over the management of U.S. News, and placed them in a position where they could elect themselves to the Board and then appoint themselves to the Plan Committee. While Board members were not entitled to participate in the stock bonus plan, beginning in 1968, the Board did award stock to its directors. This stock, carried on the corporate books as debt, represented a right to deferred compensation only, with no voting privileges. The plaintiffs have labeled the shares "phantom stock."

 As noted, the amount of benefits that each employee received upon separation hinged upon the value of the Company's stock. Since there was no market for the stock, U.S. News hired an independent appraiser, defendant American Appraisal Associates ("American Appraisal"), to arrive at a fair value for the shares. Plaintiffs challenge the validity of those appraisals, because, as they allege, U.S. News and American Appraisal worked together to eliminate from the calculation of the Company's net worth, the value of several parcels of undeveloped real estate held by U.S. News, land which, upon sale of the magazine, added considerably to the price paid per share. The real estate was held by Madana Realty Company, a subsidiary of U.S. News. Plaintiffs also allege that American Appraisal improperly valued the stock in other ways, which are discussed in greater detail, infra slip op. at pp. 60-67.

 The original complaint was filed in early 1984. Since then it has undergone several amendments. At this time the defendants are U.S. News and eight former members of its Board of Directors, the Profit-Sharing Plan, American Appraisal, and the Madana Realty Company. To redress what wrongs they feel they suffered at the hands of those defendants, plaintiffs press a variety of statutory and common-law claims. In Count I of the recently filed Fifth Amended Class Action Complaint, *fn3" U.S. News, the former directors, and American Appraisal are charged with violations of the Securities Exchange Act of 1934. Count II asserts claims for benefits and damages against U.S. News, the director-defendants, American Appraisal, and the Profit-Sharing Plan under various provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). In Counts III, IV, V and VI, U.S. News, the director-defendants, and American Appraisal are sued variously for common law and constructive fraud, breach of fiduciary duty, unjust enrichment, negligence and negligent misrepresentation. *fn4"

 Plaintiffs have moved for partial summary judgment against all the defendants on the ERISA claims. The defendants, in turn, have moved for summary judgment on all counts, pleading that the relevant statutes of limitation bar most, if not all, the claims. In addition, U.S. News, the director-defendants, and American Appraisal press a variety of theories according to which they argue that each of the statutory and common-law claims are fatally flawed as a matter of law.

 Subsequent to the filing of their Fifth Amended Complaint, plaintiffs renewed in substance their earlier filed motion for partial summary judgment. U.S. News, the director-defendants and American Appraisal also filed additional motions for summary judgment directed to the new claims raised by the Fifth Amended Complaint.

 This Memorandum Opinion will discuss the issues presented by the parties' several motions in the following order:

 In part II, pp. 26 to 42, the Court deals with defendants' motion to dismiss plaintiffs' securities law claims.

 Parts III and IV, pp. 43 to 71, are concerned with the parties' pleadings and representations on the ERISA claims. Part III, pp. 43 to 57 considers defendants' challenge to the plaintiffs' claims under ERISA. Part IV, pp. 57 to 70, addresses plaintiffs' motion for partial summary judgment on those claims.

 Part V, pp. 70 to 75, discusses ERISA's preemptive effect on plaintiffs' common-law claims and Section VI, pp. 75-84, is concerned with whether the defendants are entitled to summary judgment on those claims.

 ANALYSIS

 At this stage in the pretrial proceedings, it is not the Court's task to attempt to resolve the factual issues raised, Rodway v. United States Dep't of Agriculture, 157 U.S. App. D.C. 133, 482 F.2d 722, 727 (D.C. Cir. 1973), but merely to determine whether there are indeed material factual issues that need be presented more fully to the ultimate trier of fact. While discovery in this case fills volumes, the Court may not, tempting as it may be to do so, remove the resolution of disputed issues of fact from the fact-finder, in an effort to whittle down the litigation as originally framed.

 PART I

 DO THE RELEVANT STATUTES OF LIMITATION BAR PLAINTIFFS' CLAIMS?

 A threshold issue presented at this juncture is whether the applicable statutes of limitation bar any or all of plaintiffs' claims *fn5" relating to the undervaluation. All of the defendants seize upon this defense. As plaintiffs must concede, the applicable limitations periods would work to bar most or all of their claims unless they have been the victims of fraudulent concealment and were not otherwise on notice of their claims prior to filing suit. Yet because the questions of concealment and notice raise factual issues that vary as to each group of defendants, analysis of the limitations bar must consider the participation of each of the various defendants. Accordingly, the role of U.S. News, its directors and the Profit-Sharing Plan will first be addressed, followed by a consideration of the conduct of American Appraisal.

 A.

 AS TO U.S. NEWS, THE DIRECTORS, AND THE PROFIT-SHARING PLAN

 The Court has already visited the question concerning the extent to which the principals of the Company, its Profit-Sharing Plan, and the other centers of corporate control enjoyed overlapping jurisdictions. See 608 F. Supp. at 1336, 1344. Suffice it to say at this point that there is ample evidence in the record to support a finding that there are disputed issues of fact as to whether a pattern of fraudulent concealment engaged in by the directors may be imputed both to the magazine as a corporate entity and to the Plan. For the present discussion, then, it will be assumed that if the record reveals the presence of factual issues suggesting fraudulent concealment by the magazine's principals, the statute of limitations will be tolled as to U.S. News and the Plan, as well.

 1. Federal Law Claims

 Before analyzing the factual record, it might be well to set out briefly what is involved in a claim of fraudulent concealment. *fn6" In a recent ruling on the doctrine, Judge Edwards of our Circuit Court spoke of two situations in which fraudulent concealment may toll the statute of limitations. The first is that in which acts of concealment in addition to the primary wrong are necessary to effect concealment. Hobson v. Wilson, 237 U.S. App. D.C. 219, 737 F.2d 1, 33 (D.C. Cir. 1984). The second is that in which the concealment is implicit in the nature of the wrong. Id. In a case in which the defendants have actively concealed the wrong, the statute is tolled until the wrong is actually discovered. Id. at 34 n.103 (citing Tomera v. Galt, 511 F.2d 504, 510 (7th Cir. 1975)). In such a situation, the plaintiff need not exercise due diligence to avail himself of the doctrine of equitable tolling. In the case of "self-concealing" wrongs, the court stresses that due diligence is essential. Id. (citing Wachovia Bank & Trust Co. v. Nat'l Student Marketing Corp., 209 U.S. App. D.C. 9, 650 F.2d 342, 349 (D.C. Cir. 1980), cert. denied, 452 U.S. 954, 101 S. Ct. 3098, 69 L. Ed. 2d 965 (1981)).

 It is not seriously alleged that any of the defendants engaged in any course of conduct -- subsequent to the perpetration of the primary wrongs -- designed to conceal those wrongs. The question then is whether the wrongs were indeed "self concealing," and not merely such as to innocently evade plaintiffs' notice. Yet the doctrine of fraudulent concealment has no applicability at all if the plaintiff was on notice of the wrong complained of. Hobson, 737 F.2d at 35.

 Notice means one of two things. First, a plaintiff is on notice of a particular cause of action when he is apprised of facts unique to that cause of action. Second, a plaintiff will be considered on inquiry notice if he has not "exercise[d] due diligence in conducting [an] inquiry" upon knowledge of facts short of those that would give rise to a cause of action. Id. at 35 n.107. In other words, while a prospective plaintiff does not have to file suit on a hunch, id. at 39, once his suspicions have been aroused, once he has perceived some degree of injury, he is put under a duty to exercise due diligence to inquire further as to a possible claim.

 As a final note before considering the factual record, it is recognized that a court should be wary of granting summary judgment where, as here, issues of fraud, notice, intent, and the like are present. See generally 10A Wright, Miller & Kane, Federal Practice and Procedure: Civil § 2730 at 246-55 (1983). It is also recognized that to sustain their burden, defendants must show that there is no genuine issue of material fact in dispute and that they are entitled to judgment as a matter of law, Perry v. Block, 221 U.S. App. D.C. 347, 684 F.2d 121, 126 (D.C. Cir. 1982), even when the facts, and all inferences to be drawn therefrom, are seen in the light most favorable to the nonmoving party. Weisberg v. United States Dep't of Justice, 200 U.S. App. D.C. 312, 627 F.2d 365, 368 (D.C. Cir. 1980).

 With this in mind, two undisputed facts are noted at the outset. The first is that on each Voting Trust Certificate, *fn7" was a written notice advising the holder of his right to demand a second appraisal of the U.S. News stock. Second, under Delaware corporation law the plaintiffs had access to the appraisal reports prepared by American Appraisal and filed with agencies of that state. Both of these facts go to the issue of whether plaintiffs were diligent in their efforts to uncover matters surrounding defendants' alleged wrong-doing. But before assessing the plaintiffs' diligence, it is necessary first to determine whether there are undisputed facts indicating either that plaintiffs were on actual notice of the alleged wrongful acts or at least were on inquiry notice.

 While plaintiffs contend that they did not know of facts surrounding any wrongful undervaluation of the U.S. News stock until May 1983 (when its value rose dramatically) or December 1983 (when it was announced that the magazine was to be sold), defendants argue that plaintiffs had long been on notice of the valuation techniques alleged to have been most wrongful -- the minority-interest valuation of the stock and the low value placed on the real estate. Defendants also maintain that the appraisal reports, which plaintiffs claim were withheld and which contained essential information, were not critical to bringing the suit, since the plaintiffs did not have such reports or information even when they filed their complaint. What defendants overlook, however, is that prior to 1983, plaintiffs could only have garnered information that might have put them on notice of their claims from the reports, or from scattered remarks made by directors of the Company. The question that remains, then, is whether the plaintiffs learned or could have learned anything during the class period that would have put them on actual or inquiry notice as to any potential claim.

 Defendants adduce the transcript of the April 8, 1974, annual shareholder luncheon, PX 37, as a prime example of the kind of notice plaintiffs received regarding the valuation of U.S. News' stock. At this luncheon, Chairman John Sweet described the way in which American Appraisal valued U.S. News' stock, comparing the stock's earnings and dividend-paying capacities to those of publicly-traded companies in similar businesses. *fn8" Defendants argue that this disclosure put plaintiffs on notice that U.S. News' stock was being valued according to a minority interest, because it was being compared to that of companies whose stock necessarily was being valued (by the market) on a minority-interest basis. Mr. Sweet also mentioned at the time that the real estate was carried on the books at approximately one-third of its true value. PX 37, Q & A at 12. In response, plaintiffs contend that this was totally inadequate and insufficient: that (1) they cannot be charged with knowing the significance of comparisons between U.S. News' stock with that of publicly-traded companies; that (2) in any case, Sweet's remarks could not be interpreted to mean that the real estate was valued by American Appraisal at one-third of value, because American Appraisal issued no reports for the years 1971 through 1973 and because Sweet had no personal knowledge of the valuation techniques used by American Appraisal; and that (3) in those and subsequent years, American Appraisal was not kept informed of U.S. News' real estate development plans.

 To be sure, Mr. Sweet's personal knowledge of the appraisal methods utilized by American Appraisal is irrelevant to whether plaintiffs would have been put on notice of a potential claim if they had heard and absorbed what was said at the 1974 shareholder luncheon. Similarly, what American Appraisal knew with respect to U.S. News' nascent plans for developing its real estate holdings says nothing about what plaintiffs knew. The issue is, rather, whether plaintiffs understood that American Appraisal was not using the true value of the real estate in valuing the U.S. News stock.

 Taking a somewhat broader view, it seems inappropriate on a motion for summary judgment to impute notice, on the basis of a few remarks made at a shareholder luncheon. What percentage of employees attended the luncheons is far from clear from the record; however, it is clear that attendance was limited to holders of anniversary stock, employees who had worked at the magazine for at least five years. It was not open to employees by virtue of their participation in the Plan. At least one deposed class representative testified that he attended only some of the luncheons. Theobald Deposition at 53-57. He further testified that he did not review prepared transcripts of those meetings, because he felt discouraged from doing so by the conditions under which they were to be viewed. *fn9" Given such testimony, the Court is not prepared to hold that what defendants adduce as clear, undisputed evidence of notice stands out from the rest of the record with such clarity as to sweep aside other evidence to the contrary.

 What plaintiffs knew about the relationship between the valuation of the Company's stock and the appreciation of its real estate is hardly illuminated by the fragmented deposition testimony cited by defendants. At one point in his August 10, 1984 deposition, class-plaintiff Edward Castens testified that he was aware of a dramatic increase in the value of the real estate holdings, and that because of this appreciation, he believed he was not paid adequate retirement benefits. Id. at 18-19. However, it is not clear from context whether Mr. Castens is testifying that now, looking back upon the historic increase in land values in the area, he believes he was underpaid, or whether he knew then that the appreciation in the real estate was not reflected in the valuations performed by American Appraisal. The only seemingly clear testimony that defendants adduce to impute notice comes from plaintiff Richard Theobald:

 
Q. You had a question as to whether the value of the stock accurately reflected the value of the real estate?
 
A. I did.
 
Q. And you had that question when, in the '60s and early '70s?
 
A. Yes, all those years when things [developments in the area] were happening.

 Theobald Deposition, August 10, 1984, at 41. Yet in the same deposition, Mr. Theobald testified that he did not know how the real estate was in fact valued and, hence, could not really know whether the U.S. News stock was undervalued as a result of any misappraisal. Id. at 45. It is precisely this kind of record that prompts caution in granting summary judgment when issues of notice are raised.

 Of course, ignorance of a potential claim is not enough to toll the Statute. Rather, plaintiffs' ignorance must have been caused in some way by fraudulent activity on the part of defendants.

 While not clearly instances of concealment, information given out by U.S. News can, at least in certain circumstances, be said to fit plaintiff's characterization of it as "disinformation." One example of an ambiguous or misleading disclosure occurred at the 1981 annual shareholder luncheon, PX 42, when an employee asked whether the stock would be revalued once development was on track. Chairman Sweet answered that it would, PX 42, Q & A at 49-50, and in so doing may have given the impression that the stock value generally tracked the progression of U.S. News' real estate development plans. Again in a 1980 memorandum to employees, Sweet mentioned the favorable impact that development would likely have on the employees' Plan accounts, without revealing that a study conducted by the law firm of Arnold & Porter valued the real estate holdings at $37.5 million, PX 82 at 5, as opposed to American Appraisal's figure of $4.6 million, PX 20 at 13; that a development contract was soon to be closed; and finally, that certain downward adjustments were made by American Appraisal to further lower the value attributed to the property.

 Other instances of apparent misconduct involved the 1978 and 1980 year-end appraisals, PX 17, 20. Plaintiffs allege in connection with the 1978 appraisal that a vice president of an American Appraisal division telephoned U.S. News in March of 1979, giving a per share value estimate prior to the performance of an appraisal for that year. A letter of April 13, 1979 confirms that conversation. That estimated value was then apparently given to the appraiser who later undertook the valuation of the U.S. News stock. *fn10" The worksheets of the appraiser indicate, at that least upon initial examination, he worked backwards from the estimated value to arrive at an "appraised" value. *fn11" When questioned about this procedure, the appraiser admitted that he worked backwards in this fashion, Marshall Deposition, August 7, 1984, at 440, and further testified that a figure that he arrived at using the normal appraisal methodology was not used, because the prior estimate had already been released. Id. at 191-92.

 The 1980 year-end appraisal raises similar questions. Notes taken by the appraiser during the course of an interview of U.S. News officials in connection with the appraisal seem to support plaintiffs' allegation that U.S. News and American Appraisal fixed a range within which any valuation should fall. *fn12" While it is unclear how awareness of this "negotiated" figure affected the subsequent appraisal, see Marshall Deposition at 585, such a collaboration between the defendants raises serious doubts as to the independence enjoyed by American Appraisal and the care with which it conducted the valuations of U.S. News' stock. While the conduct of the two goes primarily to the merits of plaintiffs' claims, such conduct also speaks to the issue of concealment. If the appraisals were improperly conducted and if such impropriety was not apparent from the face of the appraisal reports, the misappraisals would constitute self-concealing wrongs. *fn13" See Fink v. Nat'l Savings & Trust Co., 249 U.S. App. D.C. 33, 772 F.2d 951, 957-58 (D.C. Cir. 1985); Hobson, 737 F.2d at 41.

 Finally, to support their allegations that the Company followed a policy of limited disclosure of information to its employees, plaintiffs adduce a December 10, 1980 memorandum written by Chairman Sweet to certain management personnel, PX 319. The memorandum was circulated as a cover sheet for the December 10, 1980 memorandum sent to employees notifying them that the Company's real estate development plans might, at some time in the future, favorably affect their retirement benefits. The cover memorandum instructs the magazine's managers not to discuss further with the employees any relationship between U.S. News' real estate development plans and the valuation of its stock. While not dispositive, the memorandum certainly suggests behavior and an attitude on the part of senior U.S. News management consistent with fraudulent concealment.

 Still, the inquiry is not quite over. To the extent that plaintiffs complain of self-concealing wrongs, they were bound to exercise due diligence in trying to discover their causes of action as soon as was practicable. While most of the plaintiffs have been deposed as saying that they did not ask to see an appraisal report nor sought reappraisal, at least one plaintiff testified that he "likely" asked to see an appraisal report during the class period. Theobald Deposition at 60-61. From plaintiffs' failure to ask for the reports, one might infer, not that plaintiffs were inattentive, but either (1) that plaintiffs were not on notice of any possible wrong-doing, *fn14" or (2) that they believed that a request for such information would be unavailing. *fn15"

 In view of the conflicting evidence in the record, the Court is compelled to find that there are material issues of fact as to whether plaintiffs exercised the requisite diligence.

 2. Common-Law Claims

 Whether the common-law claims asserted by plaintiffs are time-barred is a question that must be resolved according to District of Columbia law. Preliminarily, those claims must be segregated into two classes: those predicated upon negligence and those presupposing intentional conduct. In the first class are the claims for negligence, negligent misrepresentation, and "constructive" fraud; *fn16" in the second, claims for unjust enrichment, *fn17" breach of fiduciary duty, *fn18" and fraud.

 Those claims falling into the second category pose no special problem. While to be charged under District of Columbia law with fraudulent concealment a defendant must have engaged in some affirmative act to perfect that concealment, "any statement, word or act which tends to suppress the truth raises the suppression to that level." William J. Davis, Inc. v. Young, 412 A.2d 1187, 1192 (D.C. App. 1980) (citations omitted). A pattern of conduct that would "lull the plaintiff into inaction" would be sufficient to constitute such concealment. Id. at 1192 & n.15. A pattern of such conduct may very well have prevented the plaintiffs in this case from filing suit earlier; as the Court's discussion of equitable tolling as to the federal claims should make clear, the record is simply not unequivocal one way or the other.

 Those claims sounding in negligence appear at first to fall outside the doctrine of equitable tolling. It seems paradoxical to argue that an actor accused of negligent -- inattentive -- conduct could have engaged in that conduct in such a way as to intentionally conceal *fn19" evidence of his negligence. Yet with regard to their negligence claims, plaintiffs may avail themselves of the "discovery" doctrine. That doctrine comes into play in situations in which plaintiff has relied upon the representations or expertise of one more knowledgeable and in which the plaintiff's injury was such that it was not readily discernible. *fn20" See Ehrenhaft v. Malcolm Price, Inc., 483 A.2d 1192, 1201-02 (D.C. App. 1984). Ehrenhaft applied the doctrine to a case involving architectural malpractice; other cases have applied it to legal malpractice. See, e.g., Byers v. Burleson, 230 U.S. App. D.C. 62, 713 F.2d 856, 860 (D.C. Cir. 1983) (applying District of Columbia law); Weisberg v. Williams, Connolly & Califano, 390 A.2d 992, 996 & n.8 (D.C. App. 1978). The instant case certainly raises issues of fact as to whether plaintiffs relied upon the judgments of the U.S. News management. That the resultant injury was latent rather than manifest is also hotly in dispute. In such a situation, summary judgment is not appropriate.

 Conclusion

 Given that material issues of fact are raised as to whether U.S. News, the director-defendants, and the Plan, through its principals, engaged in a pattern of fraudulent concealment, and as to whether plaintiffs were on actual or inquiry notice of potential claims and, if on inquiry notice, whether they exercised due diligence in following through on their suspicions, the Court will not grant these defendants summary judgment as to the statute of limitations with respect to any of the claims advanced by plaintiffs. Defendants, of course, are free to renew the issue at an appropriate time during the trial on the merits.

 B.

 AS TO AMERICAN APPRAISAL

 1. Federal Law Claims

 Unlike the other defendants, American Appraisal engaged in conduct not so easily characterized as fraudulent. And if American Appraisal's conduct does not amount to fraudulent concealment, no amount of fraudulent concealment on the part of any other actors will toll the Statute as to that defendant. "The purpose of the doctrine of fraudulent concealment is to prevent a party from profiting from his own wrong, so that one who conceals facts to prevent the timely commencement of a lawsuit is estopped from pleading that defense." Greenfield v. Kanwit, 87 F.R.D. 129, 132 (S.D.N.Y. 1980). Accord Powell v. Radkins, 506 F.2d 763, 765 n.5 (5th Cir. 1975), reh. denied, 509 F.2d 576, cert. denied, 423 U.S 873, 96 S. Ct. 140, 46 L. Ed. 2d 104 (1975); Cato v. So. Atlantic & Gulf Coast Dist. of Int'l Longshoremen's Ass'n, 364 F. Supp. 489, 493 (S.D. Tex. 1973), aff'd, 485 F.2d 583 (5th Cir 1973).

 Plaintiffs have maintained throughout -- in both their pleadings and oral presentations -- that U.S. News and American Appraisal engaged in a conspiracy of unspecified dimensions, as to both time and nature. To be sure, any concealment by U.S. News would also toll the statute as to American Appraisal, if indeed the concealment was effected in furtherance of a conspiracy. Greenfield, 87 F.R.D. at 132. While the care and precision with which American Appraisal performed its function may be open to question, the record does not reveal or suggest anything in the nature of a conspiracy between the two save with regard to the 1978 and 1980 appraisals. Accordingly, if the statute is to be tolled as to American Appraisal, it is because of its own acts of concealment.

 Except for those years, plaintiffs would be hard pressed to demonstrate that American Appraisal engaged in any acts of concealment. In the first place, it was not that company's responsibility to see that its reports were distributed to the U.S. News employees. Its responsibility was ended when the reports were transmitted to the Board of Directors. *fn21" More importantly, as conceded by counsel for the class at oral argument, American Appraisal consistently disclosed its appraisal methodology in its reports. Transcript of Motions Hearing of October 16, 1985, at 16. *fn22" For every year that American Appraisal rendered appraisals, the reports indicated what weight, if any, was being given to the Company's real estate holdings and that it was valuing the Company's stock on a minority-interest basis, as well as discounting the stock's value because of its non-marketability.

 As indicated previously, the appraisals conducted for the years 1978 and 1980 give the Court pause. It may well be that in those years, American Appraisal, acting together with U.S. News, intentionally undervalued the magazine's stock to the detriment of the U.S. News employees. And as discussed above, such conduct, not revealed on the face of the appraisal reports, may indeed constitute a self-concealing wrong, so as to toll the statute.

 2. Common-Law Claims

 For the most part, what has been said with regard to the common-law claims brought against the other defendants applies as well to American Appraisal. *fn23" Those claims, such as that for common-law fraud, predicated upon intentional conduct survive by virtue of the doctrine of equitable tolling as it exists in the District of Columbia. *fn24" Because no claim for negligence or negligent misrepresentation may be brought against American Appraisal, see discussion infra, the Court need not reach the issue of whether those claims are time barred.

 Conclusion

 The question then arises as to what claims, absent evidence of fraudulent concealment, are barred. For those claims founded upon breach of fiduciary duty, such as the claims advanced against American Appraisal, ERISA provides for a six-year limitations period, except that a three-year period applies when the plaintiff has actual notice. ERISA § 413, 29 U.S.C. § 1113. Accordingly, since plaintiffs were not on notice of any potential claim against American Appraisal, even though the latter was guilty of no fraudulent concealment, as to any years other than 1978 and 1980, no claim accruing prior to February 28, 1978 may be brought against that defendant under Section 502(a)(3) of ERISA. *fn25" Since the applicable limitations period for the securities law claims is two years, *fn26" no such claim may be brought against American Appraisal, except for those accruing in 1978 and 1980. Finally, with respect to the common-law counts, claims may be brought against American Appraisal for fraud, but only with respect to the 1978 and 1980 appraisals.

 PART II

 ARE DEFENDANTS ENTITLED TO SUMMARY JUDGMENT ON PLAINTIFFS' SECURITIES LAW CLAIMS?

 Since their initial February 1984 complaint, plaintiffs have charged U.S. News, the directors and American Appraisal with violations of Section 10(b) of the Securities Exchange Act of 1934 ("Act"), 15 U.S.C. § 78j(b), and Rule 10b-5 of the Securities and Exchange Commission ("SEC"), 17 C.F.R. § 240.10b-5 ("Rule"). They maintain that U.S. News and its directors intentionally and fraudulently depressed the value of the magazine's stock and, through misstatements and omissions in communications with U.S. News employees, concealed material facts underlying that undervaluation. That course of conduct, argue plaintiffs, resulted in significant loss to their interests in both the Profit-Sharing and stock bonus plans. Further, ...


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